Ruslan Shipping Corp. v. Coscol Petroleum Corp.

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 80-C-456 -- Prentice H. Marshall, Judge .

Before Wood and Cudahy, Circuit Judges, and Campbell, Senior District Judge.*fn*

Author: Cudahy

The issue before us is whether the district court properly vacated the writ of maritime attachment and garnishment obtained by plaintiff-appellant Ruslan Shipping Corporation ("Ruslan") against funds of defendant-appellee Coscol Petroleum Corporation ("Coscol") on deposit at the Continental Illinois National Bank and Trust Company of Chicago ("Continental"). We believe the district court, in deciding the controversy, prematurely determined that the attachment procedure set forth in Rule B(1) of the Supplemental Rules of Federal Civil Procedure for Certain Admiralty and Maritime Claims ("Supplemental Rules") is unconstitutional. We therefore vacate and remand for consideration of Coscol's nonconstitutional claims.

I.

Pursuant to a tanker voyage charter party dated December 3, 1979 (the "Charter"), Ruslan carried a cargo of "(c)rude and/or dirty petroleum products" for Coscol from Es Sider and Zueitina, Libya to Nederland, Texas. Upon arrival at the port of destination, however, Ruslan's vessel, the T.T. Agios Ioannis, was unable to discharge 19,082 barrels of liquid from nine of the eleven cargo tanks that carried the crude oil loaded at Zueitina.*fn1

Coscol claimed that the liquid remaining in the tanks was Zueitina crude oil that would have been discharged but for defective pumps on the T.T. Agios Ioannis. Coscol determined that the Zueitina crude remaining on board plus freight from Zueitina to Nederland had a value of $742,321.79. Coscol therefore deducted this amount from the total freight due under the Charter pursuant to the Charter's "Amoco Cargo Retention Clause," which provides:

In the event that any cargo remains on board upon completion of discharge, Charterer shall have the right to deduct from freight an amount equal to the FOB port of loading value of such cargo plus freight due with respect thereto, provided that the volume of cargo remaining on board is pumpable as determined by an independent surveyor. Any action or lack of action in accordance with this provision shall be without prejudice to any rights or obligations of the parties.

Ruslan, however, maintained that Coscol's retention of freight under the Amoco Retention Clause was improper, since the cargo that remained on board the T.T. Agios Ioannis was, in its view, "unpumpable." After unsuccessfully urging Coscol to place the withheld freight in an interest-bearing account (rather than paying it to Vickers Petroleum Corporation, the apparent owner of the undischarged Zueitina crude oil) pending arbitration of the dispute,*fn2 Ruslan filed a complaint in the district court on January 28, 1980, for freight and demurrage allegedly due under the Charter which, in the aggregate totalled $1,067,465.11. The verified complaint, which set forth a maritime claim within the meaning of Supplemental Rule 9(h), stated that Coscol could not be found within the Northern District of Illinois. Therefore, pursuant to Ruslan's request under Supplemental Rule B(1),*fn3 the deputy clerk of the United States District Court for the Northern District of Illinois issued a summons and process of maritime attachment and garnishment directing the United States Marshall to:

Attach Defendant's debts, credits and effects to the amount sued for in the hands of the garnishee named in the Complaint, specifically:

Continental Illinois National Bank & Trust Company of Chicago

231 South LaSalle Street

Chicago, Illinois 60604.

This writ was served on Continental on January 28, 1980, resulting in attachments of Coscol's funds on deposit in the amount of $999,090.45. After learning of this attachment, Coscol moved under Rule 14 of the United States District Court for the Northern District of Illinois Admiralty Rules ("Local Rule 14")*fn4 to "vacate instanter the summons and process of maritime attachment and garnishment." Coscol also filed an answer and counterclaims for alleged short delivery and "in transit losses" totalling $1,017,321.79.

On February 6, 1980, the district court granted Coscol's motion to vacate the summons and process of maritime attachment and garnishment. The district court did not issue a written opinion setting forth the reasons for its decision but instead held (according to the transcript of its remarks) that the attachment procedure set forth in Supplemental Rule B(1) violated ...

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